Green Product Innovation and Corporate Reputation in the Construction Industry Under the Institutional Environment: The Role of Innovation Capability, and Perceived Relative Advantage

As the concept of innovative, coordinated, green, open and shared development gains popularity, small- and medium-sized enterprises (SMEs) have come to acknowledge green product innovation (GPI) as essential to sustaining competitive advantage, embedding it within their strategic frameworks. However, most SMEs heavily rely on the continued support of stakeholders, unaware that organisational learning, such as perceived relative advantage (PRA) and innovation capabilities, is the core competitive strategy for achieving green transformation. Drawing on institutional theory and organisational learning theory, this study examines how institutional pressures influence innovation capability and PRA, which in turn drive GPI and corporate reputation. This study analyses data from a survey of 330 Chinese construction SMEs using structural equation modelling. The results show that GPI significantly enhances corporate reputation. Innovation capability and PRA act as mediators in the relationship between institutional pressure and GPI. These findings highlight the importance of organisational learning and explain the critical role of the institutional environment in promoting GPI and thus enhancing corporate reputation. This research provides pathways for SMEs in the construction industry to enhance sustainability while gaining a long-term competitive advantage, contributing to the building of ecological civilisation and a community with a shared future for mankind.